Supplemental Disability Insurance

Do You Offer Supplemental Disability Insurance?

Supplemental Coverage To Pick Up Where Group LTD Is Lacking

Group long term disability insurance typically covers 60% of base salary to a monthly maximum benefit of $5,000 or $10,000. The actual policy definitions are typically more restrictive than an individual disability insurance plan, and if your company is making the premium payments for you than the benefits are taxable during a claim. So if you think that a policy that pays you 45% (60% minus taxes) of your income, with restrictive provisions and definitions, and does not allow you to take your income protection benefit to any other company is sufficient than you don't need supplemental disability insurance.

The rest of us should consider a supplemental disability insurance policy. This type of policy can increase your percentage replacement of income up from the actual 45% (60% minus taxes during the claim), can guarantee you the ability to have portable disability insurance, and can give you more liberal definitions within the policy.

A lot of group long term disability insurance plans have very restrictive definitions that define when an employee gets paid for a disability claim. Typically it is own-occupation for only the first two years in a claim, then changes to a gainful occupation definition of total disability. Typically a group LTD policy also has a limited partial disability benefit, and generally does not offer any inflation protection as well. If that is not enough of a reason not to rely on group long term disability insurance, also realize you cannot take your LTD coverage with you if you ever leave the company.

A supplemental disability insurance plan through AFS will have a more comprehensive definition of total disability, a significantly better residual disability rider, and can also have inflation protection. If you elect to use the group long term disability insurance replacement rider, then you will be able to convert a large portion of your LTD benefit into your supplemental disability insurance policy. If you buy supplemental disability insurance with the replacement rider, then no matter how many different companies you work for, you will always have a level of income protection.

One Major Reason Not To Rely On Group Long Term Disability Insurance

It is a huge mistake to think that you will always be insurable. You may not be able to obtain a supplemental disability insurance policy even now. This type of insurance is not something that is easy for everyone to get. You need to apply and the company will review detailed medical records making sure that you don't have a potential disability already. Even if you are perfectly healthy now, there is no guarantee that you will be a year from now. You could develop back problems, diabetes or some other condition that prevents you from getting a policy. Purchasing a supplemental disability insurance policy can guarantee you the ability to always have income protection no matter how much money you earn, what company you work for, or what medical condition you develop in the future. If you decide to request a supplemental disability insurance proposal from our site, make sure that you put in the "additional information" section that you would like supplemental coverage.